McCarthy Tétrault, one of the elite “Seven Sister” firms of Canada’s Bay Street legal market, has hired Ranjeev Dhillon and Rami Chalabi to head the firm’s national Cannabis Law Group in Toronto.
Dhillon brings numerous clients in the corporate, banking, funds and medical sectors to his new platform. Chalabi comes to the firm with broad experience in mergers and acquisitions, joint ventures, and capital markets transactions. Both partners came from the Canadian firm Bennett Jones.
The two partners will advise growers, corporations and investors seeking to take advantage of the newly legitimized and expanded market for marijuana products following the Canadian government’s legalization of recreational use last month. The federal government’s move made Canada only the second nation, after Uruguay, to allow citizens to grow, possess and share marijuana for more than strictly medicinal use, which has been legal in Canada since 2001.
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In Dhillon’s view, moving to a prestigious national platform was only logical, given the sweeping nature of the government’s decision last month.
“I think that, as clients get bigger and the cannabis industry becomes larger and more sophisticated, the legal platform and team have to match that trend,” Dhillon said. “Having conversed with our clients about where their business was going to go, we decided we needed to have that kind of platform, with a presence not just in Canada but in New York and London.”
Clients in the cannabis industry include many private equity firms, Dhillon noted, and even those firms that choose to invest solely within Canada need tremendous amounts of capital to put to use. Hence they look to the biggest capital markets in the world, which include New York and London.
“Toronto is a great market, but it’s not New York or London. Our clients need to have access to the deepest pockets. We can go to those cities, leverage our relationships and get meetings for our clients,” Dhillon said.
The legalization of cannabis for recreational use is intimately tied to a growth and maturing of the cannabis industry, and large companies are entering the market in response to these trends, Chalabi observed.
“You have more capital coming into the industry and more expertise,” he said, underscoring the necessity for a cannabis legal practice to have resources in such areas as corporate governance and compliance law, which might not exist at a boutique firm but are hallmarks of the partners’ new employer.
While the recreational use of cannabis in Canada is now legal and large segments of the public have welcomed the change with great fanfare, there are cultural dimensions to the cannabis issue, and not everything has changed overnight. There may be a period of adjustment before some private equity players and corporations decide that their risk aversion does not preclude manufacturing or investing in products that have long been illegal and carried a social stigma.
“Here in Canada, we’re coming out of a period of over 100 years of prohibition. I think it will take some time,” Dhillon said. Given the stigma that has greeted marijuana use for so long, the medical aspects of cannabis, in particular, require further study. Even at this point, Dhillon noted, surprisingly little is known about certain of the medicinal properties of cannabis and the product’s use as a pain reliever and anxiety suppressant.
“It’s an industry that’s going to evolve over time. The people who’ve studied the market are aware of that, and they don’t worry so much about the stigma, but others are being a little more cautious. They see opportunity but also risk. Are you getting in now, or later? You’re going to see different answers from different players,” Dhillon said.